Methanex Corporation announced a definitive agreement to acquire OCI Global’s international methanol business for $2.05 billion. This acquisition will enhance Methanex’s global production capabilities with two major methanol facilities in Beaumont, Texas, along with other strategic assets. The transaction aligns with Methanex’s long-term value-creation strategy and is expected to provide immediate financial benefits.
Strategic Benefits and Synergies
The acquisition of OCI’s methanol business is a unique opportunity for Methanex to expand its asset portfolio, leveraging North America’s abundant and competitively priced natural gas feedstock. The deal includes two world-scale methanol plants in Texas and an idled facility in the Netherlands. Additionally, the purchase brings Methanex into low-carbon methanol production, aligning with industry decarbonization efforts.
Methanex expects the transaction to generate approximately $30 million in annual cost savings through logistics efficiencies and reduced administrative expenses. These synergies, coupled with a shared culture of operational excellence between the two companies, will enhance Methanex’s overall operational performance.
Ammonia Production and New Opportunities
In addition to methanol, the acquisition includes ammonia production at one of the Texas facilities, giving Methanex a low-risk entry into the ammonia market. This product is increasingly seen as a low-carbon fuel alternative, offering further revenue diversification opportunities for Methanex.
Transaction Details and Financial Impact
The total purchase price is $2.05 billion, comprising $1.15 billion in cash, the issuance of 9.9 million Methanex shares valued at $450 million, and the assumption of $450 million in debt and leases. This price represents a 7.5x multiple of Adjusted EBITDA at a $350/MT realized methanol price, including projected synergies.
Methanex estimates the acquisition will contribute $275 million in additional annual Adjusted EBITDA, significantly boosting its earnings. The company expects to maintain financial flexibility and reduce its debt-to-Adjusted EBITDA ratio to a target range within 18 months post-closing.
Ownership and Financing
Upon completion, OCI will hold a 13 percent ownership stake in Methanex, with approximately 77 million Methanex shares outstanding. The cash portion of the transaction will be funded through cash reserves and new debt, with financing support secured from the Royal Bank of Canada.
Next Steps and Closing Conditions
The transaction is expected to close in the first half of 2025, subject to regulatory approvals and other conditions. OCI’s largest shareholder has already agreed to vote in favor of the deal. There is an ongoing legal dispute related to OCI’s Natgasoline joint venture, and Methanex may adjust the terms of the deal based on the outcome of this case.
Conclusion
Methanex’s acquisition of OCI’s methanol business marks a significant step in its strategic growth, enhancing its production capacity, entering new markets, and strengthening its position in the evolving low-carbon energy landscape. The transaction is anticipated to deliver immediate financial benefits and long-term value for shareholders.
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Source: Methanex
